Russia moves closer to liberalized LNG exports

Russia may allow producers other than state-run Gazprom to ship LNG to global markets, with plans to make it a law effective from 2014. LNG from companies including OAO Novatek and OAO Rosneft would help the nation compete with rising supplies from Australia and newcomers such as the US.

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By ANNA SHIRYAEVSKAYABloomberg

Russias Energy Ministry may from December be able to
grant licenses to export liquefied natural gas, moving closer
to breaking OAO Gazproms monopoly on shipments of the
fuel abroad.

President Vladimir Putin ordered the government to award the
ministry with the licensing rights by Dec. 15, according to a
statement on the Kremlins website dated Oct. 15 and
posted on Oct. 18.

Russia, holder of the worlds biggest natural gas
reserves, may allow producers other than state-run Gazprom to
ship LNG to global markets, with plans to make it a law
effective from 2014. LNG from companies including OAO Novatek
and OAO Rosneft would help the nation compete with rising
supplies from Australia and newcomers such as the US and meet
Asian gas demand as consumption stagnates in Europe, Gazproms traditional
market supplied by pipeline.

The exact deadlines imply that the law is to be adopted
soon, analysts at VTB Capital in Moscow, led by Dmitry
Loukashov, said today in a research note.

Putin also ordered the extension of tax breaks for Yamal fields
to Novatek deposits on the neighboring Gydan Peninsula,
provided the gas is transported to the planned LNG plant,
according to the orders on the Kremlin website.

We see the potential tax breaks for the Gydan peninsula
as a sign that the government expects Novatek to expand its
Yamal LNG plant in the longer term, Alexei Kokin, an
analyst at Uralsib in Moscow, said today in a note.

Novatek and partner Total plan to start output at their LNG
plant on the Yamal Peninsula at the end of 2016.

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